Goods and Services Tax Act, 2017 Time and Place of Supply Presenter: Bhavna Doshi IMC, Mumbai 29 April, 2017

Time and Place of Supply – Significance… Levy on supply of goods and services International Transactions Exports – IGST - Zero rated Imports – IGST Domestic Transactions – Dual Model Intra-state Transactions – Central GST + State GST ( C + S) Inter-state transactions –Integrated GST (I)

…Time and Place of Supply – Significance… Determination of Tax Liability: Whether a transaction is international or domestic ? Whether it is intra-state or interstate ?

…Time & Place of Supply – Significance Time : When liability to pay arises ? Place of Supply + Location of Supplier Whether Inter-state or Intra-State ? Whether domestic or international ? Different rules for Goods and Services

International Transactions Goods: Import - Bringing into India from a place outside India Export -Taking out of India to a place outside India Services: Where location of the supplier or location of the recipient is outside India

Cross border supply of goods/services Recipient Business 0% IGST Indian Exporter Recipient individual 0 % IGST IGST/RCM Supplier Indian Importer

Inter-state transactions Goods and Services: Place of Supplier & Supply – Different State Includes: Supply till goods cross customs frontiers/ Import of services Supply to/by SEZ developer/unit Any transaction that is not intra-state transaction

Intra-State transactions Goods and Services: Location of supplier and place of supply: In the same state Intra-state excludes: Supply of goods till they cross customs frontiers/import of services Supply to/by SEZ developer/unit Any transaction that is not intra-state transaction

Domestic Transactions State A State B Recipient & Supplier Y Business Recipient Business C + S GST IGST C + S GST Recipient individual IGST Supplier X Recipient Z Non-Bus Recipient Location & Place of Supply same

GST Design – Principles – Are they too different from current system ? A destination based multi-point system of taxation Taxes consumption Pass through for businesses – ultimate burden passed on to the consumer Input tax credit mechanism Invoice based system Coverage : Goods and Services both – entire chain

Time and Place of Supply of Goods and Services - Provisions

Meaning of “Supply”... Inclusive definition – S 7 All forms of supply of goods/services -sale, transfer, barter, lease…for consideration…in the course of or furtherance of business Import of services for consideration Activities mentioned in Sch I – without consideration

...Schedule I… To be treated as Supplies (without consideration) Transfer or disposal of business assets where ITC is availed Supply between related persons or distinct persons in course of or furtherance of business ( exclusion of Rs 50k in a fin year by employer to employee) Related Person –S 15-CGST- Very broad Distinct Person – separate registrations by a taxable person

Meaning of Related Person S 15 – Valuation – for the purpose of this Act: Such persons are directors or officers of one another’s businesses Such persons are legally recognized partners in business Such persons are employer and employee Any person owns, controls or holds, directly or indirectly, 25% of voting stock/shares One of them dir or indirectly controls other/they are controlled by third person/together they control third person They are members of same family Agent, distributor, sole concessionaire

...Schedule I… To be treated as Supplies (without consideration) Supply of goods by principal to agent & agent to principal Import of services by taxable person from related person/establishment outside India-course or furtherance of business

...Meaning of “Supply”... Exclusions Activities specified in Sch III- neither goods nor services – employer-employee relating to employment, funeral, burial, etc, sale of land/completed building, actionable claims other than lottery, gambling, betting, MPs,MLAs, Tribunals.. Activities or transactions undertaken by Govts as public authorities – to be notified Activities treated as supply of goods or services – Sch II

...Schedule II… What is Supply of Goods/Service Transfer of title – Goods Rights in goods/undivided share – without transfer of title - Service Lease/renting of land/building/trf of right to use - Service Construction of building/civil structure – Service Works contract-immovable prop-Service Food for human consumption - Service Declared Services - Service

Meaning of “Goods” – S 2 (52) Goods –Art 366( 12) - Existing Include all materials, commodities and articles Every kind of movable property other than money but includes actionable claim, growing crops, grass or things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply

Meaning of “Services” – S 2 (102) Other than goods, money and securities and, includes services relating to use of money or its conversion by cash or any other mode from one form, currency or denomination to another form, currency or denomination for which a separate consideration is charged

Time and Place of Supply … VAT Excise Duty Service Tax Proposed GST Ascertainable Goods Unascertained Goods Within State Outside State In the course of import In the course of export At the time and place of “removal” of goods Place – As per Place of Provision Rules, 2012 Time – As per Point of Taxation Rules, 2011 Place– S 10-13 of IGST Act Time – S 12 & 13 of C/S-GST Act Separate rules for goods and services

Time of Supply - Goods… General Rule – Earliest of : Date of invoice or last date for issuance of invoice: Date of removal for supply If not required to be removed, date of making available to supplier Date of receipt of payment or deemed date of receipt-date of entry in books/credit in bank account

Time of Supply - Goods… Reverse charge – Earliest of: Date of receipt of goods Date of payment/entry in books/bank a/c Date following 30 days from date of issue of invoice If none of above, date of entry in books of recipient of supply Vouchers – date of issue if supply identifiable/date of redemption Addition in value- interest, late fee, penalty for delay in payment of consideration - date of receipt Exceptional cases – due date for filing return/date of payment GST

Time of Supply – Services... General Rule – Earliest of : Date of invoice if issued within prescribed time Date of completion of service if invoice not issued within prescribed time Date of receipt of payment If General Rule does not apply – date on which recipient records in the books of account

...Time of Supply – Services… Exceptional cases – due date for filing return/date of payment GST Reverse Charge – Earliest of: Date on which payment is made Date of 60 days from date of issue of invoice If both above not possible, date of debit in books of account Voucher – Date of issue/redemption Addition in value – interest, late fee, penalty for delay- date of receipt

Place of Supply of Goods -Domestic Transactions

...Place of Supply – Goods – domestic transactions - S 10 of IGST Act… In case of movement of goods – location at the time of delivery If transferred to another person before or during movement of goods-location of business of such person – Bill to – Ship to In case of no movement – location at the time of delivery Assembled or installed at site – location of site Supplied on board conveyance – location at which taken on board Other cases – as per GST Council Direction

Place of supply of goods.. Supplier Maharashtra Invoice Customer Delhi Movement of Goods Delivery MP Invoice Invoice Movement of Goods Customer Delhi Supplier Maharashtra Delivered in Maharashtra Invoice

Inter-State sales of goods Transfer of Title Customer Delhi Supplier Maharashtra Delhi Goods Delivery MP Does it make a difference if MP is factory of Delhi Customer ?

Place of Supply of Goods – International S 11 of IGST Act Imports – Location of Importer Exports – Location outside India

Place of Supply of Services – Domestic -S 12 of IGST Act… General – Supplies to : Registered person – location of registered person Non registered person-location of recipient if address exists, if not, location of service provider Specific Rules for several supplies of services depending on nature of services

...Place of Supply of Services…Domestic… In relation to Immovable Property Location of imm property Restaurant, catering, beauty treatment, health services… Where performed Admission to cultural, artistic…event Place of event/location of Amusement Telecom- post paid Billing address of recipient Telecom – pre-paid Online recharge Where payment recd/voucher sold Address on record

...Place of Supply of Services…Domestic… Fixed Telephone Line/DTH.. Where installed Banking, Other financial services, Stock broking If not available Location of recipient as per records of supplier Location of provider Advt services to Govt Each State- apportionment –as per contract or reasonable basis

...Place of Supply of Services…domestic… Different rules for supply to Registered ( B2B – Location of Recipient - LOR) and Unregistered Persons ( B2C) in five cases: Training, performance appraisal LOR/Place of Performance Organisation of cultural, artistic, scientific…event or ancillary services thereto – LOR/Where held

...Place of Supply of Services…domestic Transportation of goods, mail, courier – LOR/Where handed over for transportation Passenger Transportation – LOR/ embarkation place for journey – if for future use-address as per record – else, supplier location Insurance – LOR/Recipient Location on record of supplier

Place of supply of services - International

Import /Export of Services - International Export S 2(6)/IGST Import S 2(11)/IGST Location of Supplier India Outside India Location of Recipient Place of Supply Convertible foreign exchange Not mere establishment of distinct person Not mere establishments of distinct person

Place of Supply of Services – International – S 13 of IGST Act No distinction between B2B & B2C General Rule – Location of recipient – if not on record, location of supplier Several Specific rules

...Place of Supply of Services…International… In relation to Immovable Property Location of imm property Restaurant, catering, beauty treatment, health services… Where performed Admission to/Organisation of cultural, artistic…event Place of event/location of Amusement Transport of goods ( other than mail, courier) Destination of goods Passenger Transportation Location of embarkation for journey

...Place of Supply of Services…International On board a vessel First Scheduled point of departure Banking, Fin Institution, NBFC Services to account holder (NRE/NRO A/c – any account bearing int to depositor) Location of supplier Online Database access and retrieval services Location of recipient of service – very wide Billing address, IP address, Crcd,etc issued in India, Bank a/c in India, fixed line in India, country code of India

Overseas Transaction – Place of Supply India UK Artist Plastic Surgeon Charges for Package included: Stay in hospital Surgery charges All medical expenses / medicines etc. Whether the above transaction can be considered as Import?

DISCUSSION/QUESTIONS ? THANK YOU Presenter : Bhavna Doshi bdoshi@bdassts.com 40